Circular debt: PTI’s failure

LAHORE: With the country’s circular debt swelled to Rs2.3 trillion and the lack of effective measures on the part of the federal government the issue has become a gigantic challenge for the authorities at the helm of affairs.

Talking to BOL News, former federal finance minister Miftah Ismail criticised the present government for its failure in tackling the circular debt issue, saying it is not easy to overcome the circular debt until or unless the government takes the issue seriously by making concrete efforts to overcome it.

Ismail suggested the government take measures for reduction in the transmission and distribution losses to 12 per cent.

For Miftah, the government also needs to increase the bill collection. “If people or institutions don’t pay their bills, their power needs should be cut off but instead the power companies give collective punishments to towns or neighbourhoods,” he said.

The government needs to strictly follow the merit order of the National Electric Power Regulatory Authority (Nepra).

“The government should not make power from diesel and furnace oil,” Miftah said, adding that it is the need of the hour that the government should run power plants on gas and not on diesel and furnace oil, as it will aggravate the problems.

If the government manages to ensure these things, it will be able to resolve the issue of rising circular debt.

Miftah said that what is more alarming is that the circular debt now equals approximately 6 per cent of GDP, adding that during the Pakistan Muslim League’s (PML-N) tenure on June 1, 2013, the circular debt was Rs505 billion plus there was PHPL (Power Holding Company debt to banks of Rs340 billion.

When the PML-N came to power in 2013, the average production at that time was 12,000MW. “During our five years in government, we added 10,000MW to the grid and left the government with an average daily production of 20,000MW,” Miftah claimed.

In May 2018, the total circular debt was Rs1.02 trillion and the daily increase in it was Rs77 million during our tenure from 2013 to 2018.

In his tweet on August 4, Miftah Ismail said: “At the end of July 2020, the circular debt stood at Rs2.2 trillion. This means that in the 26 months period, PTI has added Rs1.17 trillion in the circular debt. That’s Rs1.45 billion/day, compared with Rs77 million/day by the PMLN. That’s not all, as in August the PTI will add Rs60 billion to the circular debt.